Broker snap: Citigroup upgrades M&S to 'buy'

HIgh Street giant Marks & Spencer (M&S) was performing well on Tuesday morning after Citigroup upgraded the stock from 'neutral' to 'buy' and lifted its target price from 470p to 535p."The combination of recent, material upgrades to UK economic growth forecasts, and M&S management initiatives have markedly improved the credibility of double-digit FY15 and FY16 M&S EPS [earnings per share] growth forecasts," the broker said on Tuesday morning."We argue that this should underpin the group's current undemanding valuation metrics."While analysts now expect stronger near-term economic growth, they also have made reductions to UK savings ratio expectations and upgrades to UK employment growth/wage forecasts. Combined, these factors have driven a 150 basis-point (bp) and 250bp increase to Citi's 2014 and 2015 UK non-food like-for-like forecasts for M&S to 2.5% and 3.5%, respectively.The stock was up 2.16% at 481.8p in mid-morning trade.BC